Can a Foreclosure actually be Reversed? Many people view foreclosure as a process that happens all at once. The borrower misses a payment, and the bank swoops in to seize the house and sell it at an auction, along with the borrower’s possessions. Law enforcement deputies then make sure that the borrower leaves the home, never to come back.
Can You Reverse Foreclosure
The truth is that foreclosure is not this quick, and usually not this cruel. There were some banks down in the States that treated foreclosure as an automated process, but the regulations at work in Canada have kept foreclosure from becoming this draconian. If you let your bank know ahead of time that you will be late on a payment (as well as the reason why), then even the most aggressive lender is likely to work with you. After all, banks don’t like sending borrowers to foreclosure. First of all, they end up losing the revenue of the monthly payments. Then, they have the legal expenses that are associated with going to court for foreclosure. Finally, they often have to spend a good deal of money bringing the house back into a salable condition, or they have to discount the sale price well below the principal on the associated loan because of the damage that the evicted residents have inflicted on the interior. Foreclosure is not an option that makes much financial sense for the banks, which is why the process takes a long time. Some lenders will file proceedings as early as two missed payments (or even late payments, with particularly aggressive lenders), while others will wait for three and even four payments, in the meantime trying to contact you via phone, email and letter to find a solution with you.
The very first step in the foreclosure process involves going to court to get an order against you that sets the date of the foreclosure sale. However, the month (or in some cases, months) between the order and the date of the sale is known as the redemption period. It is at this time that you have the chance to redeem, or reverse mortgage foreclosure. It will still appear on your credit report, but instead of taking as many as 300 points off your score (which a completed foreclosure does), if you can redeem it, the foreclosure will hurt your credit significantly less.
So how do you redeem or reverse a foreclosure? Banks have to allow you to redeem it if you come up with the full amount of the principal owed, as well as interest and fees, before the foreclosure sale is set to take place. Some banks will allow you to redeem it if you can simply bring the loan current, or perhaps get ahead a payment or two. The law requires banks to permit redemption with the full amount, but some lender policies also allow redemption just for coming current. Of course, if you are able to redeem it for less than the full principal, then you still face some hurdles when your loan comes up for renewal, as your credit score will be significantly lower than it was, unless you have more than seven years (the amount of time a foreclosure stays on your credit report) remaining before the renewal of your loan. However, redemption is much better than foreclosure, as you get to remain in your home as the owner.
Amansad Financial has helped many clients who are in this position, though, so you are not alone. One of the most frequent ways in which we help clients avoid foreclosure involves the use of private lenders. These are individuals or companies that have capital to invest and are looking for ways that are not as risky as purchasing stocks or investing in futures. They don’t want to settle for the rock bottom interest rates that come from passbook savings accounts either, though, and private lending yields higher rates of interest than the banks get on their mortgages (you do, after all, represent a higher level of risk).
If you are finding yourself at risk of entering foreclosure, the best thing you can do today is call your bank and start finding a way to work things out without going to court. If you can avoid having that foreclosure on your credit report, you will be much better off over time. However, if the filing has already taken place, Amansad Financial can still help. Give one of our foreclosure reversal experts a call today.